See 755 ILCS 5/6-2. Moreover, Athena Stavros could not confer on the court jurisdiction over
the estate through her act of filing suit in Tax Court in the name of the estate. Accordingly, the
court concludes that it does not have the authority to grant relief against the Estate of Steve O.
Stavros, and disrmisses Count | of the complaint.

The court next considers defendants’ arguments that the remaining claims should be
dismissed under Rule 12(b)(6), When ruling on a motion to dismiss under Federal Rule of Civil

Procedure 12(b)(6), the court must consider “whether relief is possible under any set of facts

consistent with the allegations of the plaintiff's complaint.” Pokuta v. Trans World Airlines.
Inc., 191 F.3d 834, 839 (7" Cir. 1999). That is, if it is possible to hypothesize a set of facts that
would entitle the plaintiff to relict, consistent with the allegations in the complaint, dismissal

under Rute 12(b)(6) is inappropriate. Graehling v. Village of Lombard, 58 F.3d 295, 297 (7" Cir.

1995).

Defendants contend that the government’s fraudulent conveyance claim in Count LU of the
complaint is barred by the four-year limitations period provided in the Illinois Uniform

Fraudulent Transfer Act (“UFTA”), See 740 ILCS 160/10. The government responds that the

timeliness of actions brought by the United States is not governed by state statutes of limitations?
As the United States Supreme Court has long held, “(w]hen the United States becomes entitled to
a claim, acting in its governmental capacity and asserts its claim in that right, it cannot be
deemed to have abdicated its governmental authority so as to become subject to a state statute
putting a time limit upon enforcement.” United States v. Summerlin, 310 U.S. 414, 417 (1940).

The government argues that since there is no express congressional directive subjecting the

indemnify and hold harmless all creditors and heirs of the decedent and other persons relying
upon the affidavit who mncur loss because of such reliance”).

* The government also argues that the UFTA, which went into effect in 1990, does not
apply retroactively to the 1988 transfers at issue here. Given the court’s conclusion that the
UFTA’s limitations period would not apply to an action filed by the federal government in any
event, the court need not reach this argument.



The portion of defendants’ motion to dismiss attacking Count LV, which alleges
transferee liability, suffers from a similar flaw. Defendants argue that they cannot be held liable
as transferees for the tax delicicncics because no transferor party exists against which the tax
asscssments could be reduced to judgment. This argument is based on defendants’ allegation in
their motion to dismiss that no cstate was opened following the death of Steve Stavros. While
the court could properly consider this information outside the pleadings in the context of
evaluating a motion to dismiss for lack of jurisdiction under Rule 12(b)(1), the court may not
consider this information in the context of evaluating a motion to dismiss for failure to state a
claim upon which relief could be granted under Rule 12(b)(6). Therefore, defendants’ motion to
dismiss Count IV is denied.

Finally, although they present no argument on the issue, defendants move to dismiss the
unjust enrichment in Count V, because it is “based on the viability of Counts | through IV.”
Unjust enrichment can be pleaded as a scparate cause of action under Tllinois law. See Scholes v

Ames, 850 F, Supp. 707, 711-12 (N.D. Ill. 1994), aff'd, 56 F.3d 750 (7 Cir. 1995); Scholes v.

African Enter., Inc., 838 F. Supp. 349, 357 (N.D. Hl. 1993) (citing HPI Health Care Servs., Inc.

v. Mt. Vernon Hosp., Inc., 545 N.H.2d 672 (Ill. 1989), aff'd, 56 F.3d 750 (7" Cir. 1995).

Defendants’ motion to dismiss Count V is denied.

ORDERED: The motion to dismiss is granted in part and denied in part.

ENTER:

George W. Lindberg,
Senior United States District Judge

Nov 12 2002

DATED:



1999), When the court’s jurisdiction has been challenged, “{t]he plaintiff has the obligation to
establish jurisdiction by competent proof.” Id.

Defendants contend that the court lacks jurisdiction to enter judgment against the Estate
of Steve O. Stavros because the estate does not have the capacity to be sued. In support of their
contention, they state that after Steve Stavros diced, no probate estate was opened and a personal
representative was not appointed to act on behalf of his estate. Accordingly, they argue, under
Illinois law, no estate exists to be sued and the court does not have jurisdiction to decide a claim
made against the estate.

Federal Rule of Civil Procedure 17(b) provides that the capacity to be sued of an
individual acling im a representative capacity is determined by the law of the state in which the
district court is held. Under Iilmois law, a court lacks the authority to adjudicate claims made
against a decedent’s estate until the decedent’s will is admitted to probate, or, in the case of
intestacy, until Ictters of administration issue. Estate of Gebis, 710 N.E.2d 385, 389 (Ill. 1999).
This procedure serves the purpose of preserving the schedule establishing the priority in which
claims against an estate must be paid; a contrary result would permit a claimant to circumvent the
priority schedule. Sec id, at 389.

Here, the government offers no evidence that Steve Stavros’s will was admitted to
probate.' Instcad, the government argues that because Athena Stavros si gned a small estate
affidavit and filed an action in Tax Court on behalf of the estatc, the estate may be subject to suit,
The court disagrees. The administration of small estates through the use of the small cstate
affidavit takes place outside the judicial process. Sce 755 ILCS 5/25-1. Thus, as in other
circumstances in which a creditor wishes to pursue a claim against an estate where no estate has

been opened, the creditor must petition the court for admission of the decedent’s will to probate.”

! The mere act of filing a will does not open an estale. See 755 ILCS 5/6-2.

? Alternatively, a creditor may be able to seek recovery against the affiant of the small
estate affidavit. See 755 [LCS 5/25-1(c) (“[t]he affiant signing the small estate affidavit...shall

3



United States to a state statute of limitations, the ten-year limitations period prescribed by 26
U.S.C. § 6502(a)(1) should apply.

Defendants’ position relics in part on the commentary to the Uniform Laws Annotated
version of the UFTA, which states that the purpose of the limitations provision “is to make clear
that lapse of the statutory periods prescribed by the section bars the right and not merely the
temedy. The section rejccts the rule applicd in United States y. Gleneagles Inv. Co., 565 I.
Supp. 556, 583 (M.D. Pa. 1983) (state statute of limitations held not to apply to action by United
States based on Uniform Fraudulent Conveyance Act).” Unif. Fraudulent Transfer Act § 9,
comment (1) (citations omitted),

In further support of their position, defendants cite an opinion from the District of
Hawaii, in which the district court examined Hawaii’s version of the UFTA, which contains a
limitations provision that is identical to Illinois” version. Sce United States v. Vellalos, 780 F.
Supp. 705 (D. Hawaii 1992). The Vellalos court read Summerlin to stand for the limited
proposition that states may not limit the federal government’s common law right to collect a debt
limit a state’s right to extinguish a statutory cause of action through a statute of rcpose following
the expiration of a prescribed time period, even with respect to rights held by the United States.
Id. The court concluded that Hawaii's UTA extinguished the cause of action sought to be
brought by the federal government. Id. at 708.

Defendants urge the court to follow the reasoning of the Vellalos court, and hold that the
rule set forth in Summerlin does not apply to the Illinois UFTA because the limitations provision
is a statute of repose. The court declines defendants’ invitation. Numerous other courts,
including one in this district, have rejected the distinction between common law actions and
statutory actions made by the Vellalos court, in the context of analyzing their states’ versions of

the UFTA. See, .g., United States v. Hatfield, No. 94-50397, 1996 WL 153686, at *3 (N.D. Tl.

Apr. 2, 1996) (Reinhard, J.); United States v. Zuhone, No. 96-1078, 1996 WT, 437509, at *3



4 Minute’ Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge } i Sitting Judge If Oth
vr Magistrate Judge George W. Lindberg than Assigoed Judge
CASE NUMBER 02 C 3509 DATE 11/12/2002
CASE United States of America vs. Athena Stavros
TITLE

[In the tollowing box (a) indicate the purly filing the motion, ez., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

MOLION: of the motion being presented.]

DOCKET ENTRY:

qd) 0 Filed motion of [ use listing in “Motion” box above.]
(2) i) Brief in support of motion due
(3) im Answer brief to motion due__—. Reply to answer briefdue_
(4) o Ruling/Hearngon set for_ at.
(5) Oo Status hearing[held/continued to] [set for/re-set forlon set for at.
(6) Oo Pretrial conference[held/continued to} |sct for/re-sct for]on set for | at .
(7) oO Trial[set for/re-set forlon_ at
(8) o (Bench/Jury trial] [Hearing] held/continued to at_
a

This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OrRcpa(m) Local Rule 41.1. OFRCP41(ay(1) C1 FRCP41(a)(2).

ao [Other docket entry] The motion to dismiss is granted in part and denied in part. Enter
memorandum opinion and order.

(1) [For further detail see order attached to the original minute order,]

No notices required, advised in open court, | Doeeiinent
Le Nuniber

No notices required. ‘
4 umber of novices.

Notices mailed by judge's staff. NOV 13 2002

Notified counsel by telephone.

die docketed_~

ao | Docketing to mail notices.

Mail AO 450 form.

qynoa Lalyisia sit
yea

Copy to judge/magistrate judge.

courtroom 5 1 AON ZO
SLB deputy's 82:9 Wd @

Datertingd pedded ws ts

central Clerk's Office waitin, Seputy initial



(C.D. TH. May 29, 1996); Stoccklin v. United States, 858 F. Supp. 167, 168 (M.D. Fla, 1994),
aff'd, 120 F.3d 273 (11" Cir. 1997); Flake v. United States, No, 93-0306, 1995 WL 735740, at

*3-4 (D. Ariz. Sept. 29, 1995); see also United States v. Bantau, 907 F. Supp. 988, 991 (N_D.
P PP

Tex. 1995) (rejecting application of UFTA limitations period in tax case brought by federal
government, without reference to Vellalos distinction). The court agrees with the reasoning of
these courts, and finds that the JFTA’s limitations period does not apply in this case, and that the
government’s fraudulent conveyance claim is timely under the ten-year statute of limitations
imposed by 26 U.S.C, § 6502(4)(1). Accordingly, defendants’ motion to dismiss Count IT is
denicd.

Defendants next argue that Count LL, which secks to foreclose federal tax liens against
property transferred by Steve Stavros to his daughters, should be dismissed. Defendants contend
that if these transfers were held to have been fraudulent, title in the properties would then revert
to the original status held prior to the transfers. According to defendants, title in the Stavros
personal residence had been held by Steve and Athena Stavros as joint tenants, and title in the
condominium had been held by Steve Stavros, Athena Stavros, and her mother as joint tenants,
prior to the transfers. Thus, if the transfers were set aside, the properties would then puss by
operation of law to Athena Stavros and her mother upon the death of Steve Stavros, where they
would be beyond the government’s reach.

The manner in which Steve Stavros held title in the properties at issue prior to their
transfer is not alleged in the complaint. Rather, defendants offer this information in their brief in
support of their motion to dismiss. The court may not consider information outside the
complaint on a motion to dismiss under Rule 12(b)(6). Wilkow v. Forbes. Inc., 241 F.3d 552,
555 (7" Cir. 2001). The court therefore cannot consider defendants’ allegation that the properties
at issue were held in joint tenancy without converting the motion to a motion for summary
judgment, see Fed. R. Civ. P. 12(b)(6), an action the court declines to take, Defendants’ motion

to dismiss Count ITT is denied



IN THE UNITED STATES DISTRICT COURT B
FOR THE NORTHERN DISTRICT OF ILLINOIS DOCKETE
EASTERN DIVISION Nov 1 3 2002

UNITED STATES OF AMERICA,

Plaintiff,
02 C 3509
Vv.
Judge George W. Lindberg
ATHENA STAVROS, as personal representative
of the Estate of Steve O. Stavros,

JULIE LYNN STAVROS, KIMBERLY SUB
SCHMITZ, KELLY LEIGH STAVROS, and
NEW CENTURY MORTGAGE CORP.,

wee eS Se eS Se HS SS

Defendants.
MEMORANDUM OPINION AND ORDER
Defendants have moved pursuant to Federal Rules of Civil Procedure 12(b){1) and
12(b)(6) to dismiss plaintiff's complaint. For the reasons stated bclow, the motion to dismiss is

granted in part and denied in part.

The following facts are taken from the complaint. On January 8, 1988, the Internal
Revenue Service notified spouses Steve and Athena Stavros of proposcd adjustments to their
federal tax liability for the years 1979 through 1983, based the disallowance of claimed
investment tax credits. Twelve days later, Steve and Athena Stavros transferred their interests in
a condominium unit and their personal residence to their daughters, defendants Julie Lynn
Stavros, Kelly Leigh Stavros, and Kimberly Sue Schmitz. These transfers werc made for no
consideration, or inadequate consideration. Steve Stavros continued to live in his personal
residence after the transfer.

On May 31, 1988, Steve Stavros died. Following Steve Stavros’s death, Athena Stavros

filed a Small Estate Affidavit, which listed a trust valued at $3,500 as the sole asset of the estate,

On September 28, 1990, the Commissioner of Internal Revenue issued a notice of



deficiency to Athena Stavros and the Estate of Steve O. Stavros, asserting a $21,065 income tax
deficiency for the years 1979 through 1983. In response to the notice of deficiency, Athena

Stavros filed a pctition with the United States Tax Court, under the caption “Estate of Stavros, et

al y. Commissioner.” The parties in that case eventually entered into a Stipulation of Settlement,
which affirmed the disallowance of investment tax credits with respect to the Estate of Steve O.
Stavros. The settlement acknowledged that Athena Stavros qualified as an imnocent spouse
under 26 U.S.C. § 6013(e), and that she was not liable for the deficiency. On January 23, 1992,
the Tax Court sustained the deficicncies against the Estate of Steve O. Stavros. On May 26,
1992 and June 17, 1992, a delegate of the Secretary of the Treasury made assessments against the
Estate of Steve O. Stavros pursuant to the Tax Court decision, and sent notice of the assessment
and demand for payment to the estate. No payments were made. According to the complaint, as
of February 28, 2002, the accrued tax liabilities, penalties, and interest owed totaled $178,851.11.

On May 15, 2002, the federal government filed this action, seeking to reduce the 1992
assessments to a judgment against the Estate of Steve O. Stavros; declare that Steve and Athena
Stavros’s transfer of properties to their daughtcrs was fraudulent; foreclose federal tax liens on
the properties transferred to the daughters; hold that the daughters are liable for the tax deficiency
to the extent of the value of the properties they received; and hold that the daughters were
unjustly enriched to the detriment of the United States as a result of the property transfers.
Defendants have moved to dismiss the complaint for tack of subject matter jurisdiction and for
failure to state a claim upon which relief can be granted.

The coutt first reviews defendants’ charge that the court lacks subject matter jurisdiction.
In considcring a motion to dismiss for lack of jurisdiction under Fed, R. Civ. P. 12(b)(1), the
court must accept the complaint’s well-pleaded factual allegations as true and draw reasonable
inferences from those allegations in the plaintiff's favor. Transit Exp., Inc. v. Ettinger, 246 F.3d
1018, 1023 (7" Cir. 2001). The court may properly consider material outside the pleadings on a

motion to dismiss for lack of jurisdiction. See Sapperstein v. Hager, 188 F.3d 852, 855 (7" Cir.

2